The Housing Market is a BUY

The Federal Reserve today lowered the Federal Funds rate to 0%-0.5%. They also announced that they will be the ultimate buyers of mortgage bonds. This fact will ultimately raise the prices and lower the yields of corporate and junk bonds. This will also have the effect of lowering mortgage rates into the 4% area. The Federal Reserve also said that they will keep rates low for an extended period of time. In one month or so, President Obama will be instituting a $500 Billion fiscal policy that will aid in creating jobs. The markets have bottomed and now it appears that monetary policy (the Federal Reserve) will do anything possible to get the housing market moving. The combination of fiscal and monetary policy will lead to better markets in 2009.

Random thoughts....Bernanke performed well today and probably assured himself of a chance to get re-appointed to the Federal Reserve in two years by President Obama....the Christmas rally is here...if the market can close above 9,000 this week ...look for a test of 9,300-9,600 next week....It is time to find that house that your local bank owns in foreclosure and is willing to sell it today...